Monthly Economic and Financial Developments (MEFD) September 2020
Published: Monday November 2nd, 2020
Domestic Economic Developments
Overview
The Novel Coronavirus (COVID-19) pandemic continued to adversely impact domestic economic developments during the month of September. Tourism sector activity remained largely at a standstill, as the high value-added air segment and the dominant sea component remained paused, due to globally imposed travel restrictions. Notwithstanding, the restart of foreign investment-led projects, along with hurricane rebuilding works, provided some stimulus to the construction sector. In price developments, the domestic inflation rate narrowed during the twelve months ending June, underpinned by the decline in fuel costs. On the monetary front, bank liquidity contracted, as the growth in domestic credit outpaced the rise in the deposit base. Similarly, external reserves decreased during the review month, owing to net foreign currency outflows on private sector activities.
Real Sector
Tourism
The tourism sector, continued to be largely dormant during the review period, as ongoing globally imposed travel restrictions, to contain the spread of COVID-19, virtually eliminated air and sea arrivals.
The most recent data provided by the Nassau Airport Development Company Limited (NAD) revealed that total international departures reduced to just 2,526 during the month of September, extending the 9.2% falloff to 69,729 recorded in the comparable period of 2019. On a year-to-date basis, outward-bound traffic reduced sharply by 70.0%, a reversal from a 15.2% expansion relative to same period last year. Underlying this outturn, the U.S. segment declined by 71.1%, a turnaround from a 16.6% increase in the prior year. Similarly, the non-U.S. international segment decreased by 62.9% vis-à-vis a 7.0% growth in the preceding year.
In the vacation rental market, data from AirDNA revealed that total room nights sold declined by 65.3% for the month of September compared with the same period in 2019, amid a contraction in bookings for entire place listings and hotel comparable listings, by 65.8% and 61.3%, respectively. In contrast, the average daily room rate (ADR) for respective entire place listings and hotel comparable listings rose by 6.4% to $355.35 and by 1.9% to $142.28. Over the nine-month period, total room nights sold fell by 46.6%, as bookings for both entire place listings and hotel comparable listings were lower by 47.7% and 35.4%, respectively. Pricing indicators varied, as the ADR for entire place listings rose by 2.8% to $405.59, while the ADR for hotel comparable listings decreased by 2.1% to $151.66.
Prices
Reflecting the decline in global oil prices, domestic consumer price inflation—as measured by changes in the average Retail Price Index for The Bahamas—narrowed to 0.88% during the twelve months to June, from 3.31% a year earlier. An analysis by category showed that average prices for housing, water, gas electricity & other fuels declined by 0.9%; miscellaneous goods & services, by 0.7%; clothing & footwear, by 0.5% and food & non-alcoholic beverages, by 0.4%, after posting increases in 2019. In addition, average cost decreases were recorded for education (3.3%) and communication (1.0%). Further, average inflation rates moderated for furnishing, household equipment & maintenance (1.3%) and transport (4.7%). Providing some offset, the rise in average prices quickened for health (10.2%), restaurants & hotels (7.3%), alcohol beverages, tobacco & narcotics (4.5%) and recreation & culture (1.2%).
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